Unlike conventional estate planning documents that deal with transfer of property to beneficiaries upon your death (i.e. last will and testament, or revocable trusts) the durable power of attorney operates during your lifetime and allows you to chose individuals to act on your behalf. At Serafini, Michalowski, Derkacz & associates, P.C., our estate plans generally include durable powers of attorney, as these documents are just as important as wills and trusts.
A power of attorney allows a person (the principal) to authorize another person (the agent) to act in his or her place. In Michigan, a Durable Power of Attorney (DPOA) is defined as a power of attorney by which a principal designates another as the principal’s attorney in fact in writing and the writing contains the words “This power of attorney is not affected by the principals subsequent disability or incapacity, or by the lapse of time” (DPOA Effective upon Execution) or “This power of attorney is effective upon the disability or incapacity of the principal” (DPOA Effective upon Disability).
A Durable Power of Attorney Effective upon Execution allows the agent’s authority to begin immediately after the written DPOA is signed. There are dangers in allowing an agent’s authority to begin immediately, and you should consider whether you trust the agent to have this power when you are not disabled. Although dangers are associated with a power that is immediately effective, there are also advantages. A primary advantage to making the DPOA effective immediately is that it eliminates the need to produce evidence that the agent’s authority has been triggered. A DPOA effective upon execution is generally favorable to married couples, where the benefit of acting anytime outweighs the concern of giving the agent too much power while the individual can make their own decisions.
A Durable Power of Attorney Effective upon Disability is contingent on the event of disability and protects against the possible unintended use of the power by the agent while the principal is not disabled. The problem with DPOA’s effective upon disability is that the principal must be declared disabled. An individual is declared disabled by court determination or the written certification of two licensed physicians. A DPOA effective upon disability is best for single individuals that do not want their agent to bind them during periods when they can make their own decisions.
Although a DPOA can be broad or specific, the agent generally has powers to handle the following:
1.) Collection and management of real or personal property 2.) Buying and selling of real property 3.) Borrowing money 4.) Business 5.) Banking 6.) Tax returns and reports 7.) Safe-deposit boxes (access to and removal of property from)
8.) Proxy rights 9.) Government benefits 10.) Employment benefits 11.) Legal and administrative proceedings 12.) Life insurance 13.) Transfers in trust 14.) Delegation of authority
For more information regarding powers of attorney, contact your Michigan estate planning attorneys at 1 (866) 529-3537.